Optical (Blu-ray/DVD) and Digital (EST/UV) Sales Thread

[Kosty]

Well just like one cannot deny that the 1Q 2011 TBO disparity was a huge negative impact on the annual statistics one certainly can't deny that the more favorable TBO so far is having a positive impact.

The difference of course is the magnitude and the length of time involved.

Last year in the first half large amount of times last year that there were complete TBO disparity blowouts of over $350 M in several weeks and a $750 M to $850 M disparity in 1Q 2011 and 1H 2011. Now we have under a $150 M disparity through more than half of the 1Q 2012 period. Not quite the same order of magnitude or sustained length as last year.

It will be interesting to see how things progress.

[PSound]

Originally Posted by bruceames

15.6% is what it is. And with it, OD is up nearly 1 percent. If box office were flat, then OD would be down perhaps 10 percent. It's a big difference, and not any less so then the Q1+Q2 2011 box office last year, which was made a big deal out of.

15.6% is 15.6%. Add in a catalog release strong enough to outsell the biggest new release of the year in its release week, and it is obvious that the sample is too small to be indicative of any trend.

End of Q1 and end of H1 results will be far more interesting, and telling.

[Kosty]

Originally Posted by PSound

15.6% is 15.6%. Add in a catalog release strong enough to outsell the biggest new release of the year in its release week, and it is obvious that the sample is too small to be indicative of any trend.

End of Q1 and end of H1 results will be far more interesting, and telling.

I agree that it is actually quite early to see any real trend at all or to project it for the year. But so far its more promising than the start of last year.

Its simply the case that the strength of releases always matter to a significant degree just like it did in the various periods good and bad for last year.

One possible difference though this year is that once we get past the first couple weeks in April there there are not many remaining spikes for 2011 remaining until September. So what we see in a month or so with that YoY metric will have some inertia until the fall. Then of course its how the summer releases perform in the fall including the second Twilight release later this year.

We also have the issue of how much the routine base of non new release Blu-ray catalog sales, new to Blu-ray titles, Titanic etc proxy new re releases all improve as well.

One additional thing is so far in 2012 the Blu-ray unit price declines has been far less than in most of 2011 so that any gains in Blu-ray unit sales should more closely translate into revenue gains. So any gains in Blu-ray catalog sales or the impact of better releases and TBO should translate better into revenues.

[bruceames]

What trend are you talking about? That box office YoY will sustain at its present pace? Or that 7 weeks is not enough to attribute strong box office to strong OD sales? I was referring to the second case, and you don't need a long trend to see if the box office is affecting sales.

As for the first case, I really don't care. It will be what it will be, and OD sales will be affected proportionally to the box office, as it always has.

[Malanthius]

Bluray wouldn't have to worry about these fluctuations in box office so much if it were actually selling well. That shows its weakness IMO. That's why I have always felt so strongly about how important catalog sales are. New releases I felt would always do OK. But the real measure of success would be to resell catalog well. Something Bluray has failed at.

[bruceames]

Originally Posted by Malanthius

Bluray wouldn't have to worry about these fluctuations in box office so much if it were actually selling well. That shows its weakness IMO. That's why I have always felt so strongly about how important catalog sales are. New releases I felt would always do OK. But the real measure of success would be to resell catalog well. Something Bluray has failed at.

DVD in its heyday was selling more catalog than new release. And we're not even talking about TV shows, which it sold a ton.

Catalog and TV release trends were far more important indicators than new releases, but for Blu-ray it's all about the new release and occasional tent pole catalog. DVD today is also more fragile to new release strength, but not nearly to the extent of Blu-ray. It still sells a lot of TV shows that never see the light of day on Blu-ray.

[PSound]

Originally Posted by bruceames

What trend are you talking about? That box office YoY will sustain at its present pace? Or that 7 weeks is not enough to attribute strong box office to strong OD sales? I was referring to the second case, and you don't need a long trend to see if the box office is affecting sales.

As for the first case, I really don't care. It will be what it will be, and OD sales will be affected proportionally to the box office, as it always has.

Box office strength is not sustainable.

And even more than that, the YTD growth has been strongly impacted by a strong catalog release (in Alice) because of the small sample size of overall weeks.

That will normalize over time. Again, end of Q1 and H1 will be much better benchmarks.

[chipvideo]

We have to remember that last year the first quarter was horrible for blu-ray. I remember how weak it was. Funny thing is it did better than the 4th quarter.

So with that in mind I expect this year first half of the year to have the best YOY % growth and then the 3rd quarter could actually be down. I expect flat 3rd quarter followed buy about a 10% YOY 4th quarter growth ending with about 10% growth for the entire year.

[cakefoo]

Alice released LAST year

[cakefoo]

Originally Posted by chipvideo

We have to remember that last year the first quarter was horrible for blu-ray.

The presence of Twilight in 2010 is what contributed to 2011's poor YOY in Q1. That movie didn't release until week 11.

Originally Posted by chipvideo

We have to remember that last year the first quarter was horrible for blu-ray.

The presence of Twilight in 2010 is what contributed to 2011's poor YOY in Q1. That movie didn't release until week 11.

Doing fine the first 10 weeks (close to the whole year average YOY growth), then an extended two week nosedive to 8%, caused by the first 9 days of Twilight:

[Kosty]

Originally Posted by bruceames

What trend are you talking about? That box office YoY will sustain at its present pace? Or that 7 weeks is not enough to attribute strong box office to strong OD sales? I was referring to the second case, and you don't need a long trend to see if the box office is affecting sales.

As for the first case, I really don't care. It will be what it will be, and OD sales will be affected proportionally to the box office, as it always has.

I was talking about its too early to see if the increased Blu-ray YoY change this year is just a result just of the strength of releases or something more than that. I agree with PSound on that.

[Kosty]

Originally Posted by Malanthius

Bluray wouldn't have to worry about these fluctuations in box office so much if it were actually selling well. That shows its weakness IMO. That's why I have always felt so strongly about how important catalog sales are. New releases I felt would always do OK. But the real measure of success would be to resell catalog well. Something Bluray has failed at.

Catalog sales are probably increasing as well as cakefoo was talking about earlier in the year. We will see soon enough what the new 2012 floor is for a base rate of Blu-ray routine sales when we see weeks without much in the way of new releases.

Catalog sales are important as they grow over time but they never will be for Blu-ray what they were for DVD in its prime.

[Kosty]

Originally Posted by bruceames

DVD in its heyday was selling more catalog than new release. And we're not even talking about TV shows, which it sold a ton.

Catalog and TV release trends were far more important indicators than new releases, but for Blu-ray it's all about the new release and occasional tent pole catalog. DVD today is also more fragile to new release strength, but not nearly to the extent of Blu-ray. It still sells a lot of TV shows that never see the light of day on Blu-ray.

TV shows will never be sold on Blu-ray as they were on DVD. TV on DVD really helped sustain DVD sales revenues from 2004 to 2006 or 2007 after the major catalog theatrical move titles were starting to be exhausted for DVD release.

Netflix and Hulu streaming is just a superior experience for episodic TV series viewing for most consumers and much of that old TV show catalog does not benefit much from high definition Blu-ray anyway if it was standard definition or video based. Plus all the old special interest DVD skus and all the double dip DVD releases as well that are useless or obsolete to release on Blu-ray.

Blu-ray is more geared to theatrical movies and for high quality television series and much of the other DVD list of skus will never be released on Blu-ray.

[Kosty]

Originally Posted by chipvideo

We have to remember that last year the first quarter was horrible for blu-ray. I remember how weak it was. Funny thing is it did better than the 4th quarter.

So with that in mind I expect this year first half of the year to have the best YOY % growth and then the 3rd quarter could actually be down. I expect flat 3rd quarter followed buy about a 10% YOY 4th quarter growth ending with about 10% growth for the entire year.

That is factually inaccurate and not true. The Blu-ray YoY growth rate in the 1Q 2011 period was 10% in the DEG stats and 15.5% in the 4Q 2011 period. Besides the obvious typical 4Q holiday seasonal magnitude difference.

1Q 2011 YoY was also at around 20% for the first ten weeks of the 2011 year and only dived down in week 11 of the year when the first Twilight Saga movie of last year was released with a unmatched -$380 M TBO advantage for that 2010 week. The last five weeks of 1Q 2011 was when the 2011 box office disparity really took effect.

It will be interesting to see how the year develops but from mid April to mid September the comparison weeks in 2011 were not that strong.

A lot will depend on how the summer releases far as those are the new release strength drivers for the 4Q as always. But the higher the YoY statistics are a few weeks into the 2Q period the higher the inertia will be for them throughout the bulk of the 2Q and 3Q periods.

[Kosty]

Originally Posted by cakefoo

The presence of Twilight in 2010 is what contributed to 2011's poor YOY in Q1. That movie didn't release until week 11.

Doing fine the first 10 weeks (close to the whole year average YOY growth), then an extended two week nosedive to 8%, caused by the first 9 days of Twilight:

Spoiler:

All of the weeks with really large TBO mismatches affected the YoY cumulative trend mostly negatively as most of those weeks were in favor of 2010.

Here is the 2011 vs 2011 Cumulative YoY Trend with the major inflection points annotated for the weeks where there was more than $200 M TBO disparities (all except Toy Story 3 were more than $280 M disparities for the matching weeks).

2010 clearly had more impact weeks than 2011 had but all were major inflection points in the YoY Blu-ray trendline.

If the 2012 vs 2011 TBO is more favorable or just more even than it was in 2011 vs 2010 then that should benefit the 2012 Blu-ray YoY cumulative metric.